UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

Filed by the Registrantx                            Filed by a Party other than the Registrant¨

Check the appropriate box:

STEPAN COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

STEPAN COMPANY

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on May 3, 2011April 30, 2013

at 9:00 a.m. (CDT)

To the Stockholders:

Notice is hereby given that the Annual Meeting of Stockholders of STEPAN COMPANY (the “Company”) will be held at the Company’s Administrative and Research Center at Edens Expressway and Winnetka Road, Northfield, Illinois, on Tuesday, May 3, 2011,April 30, 2013, at 9:00 a.m. (CDT), for the following purposes:

The Board of Directors has designated the close of business on March 4, 2011,1, 2013, as the record date for determining holders of the Company’s 5 ¹/₂% Convertible Preferred Stock and the Company’s Common Stock entitled to notice of and to vote at the meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 3, 2011.April 30, 2013.

The Proxy Statement and Annual Report to Stockholders, including Form 10-K for fiscal year 2012, are available at http://www.edocumentview.com/SCL.

The proxy materials available at http://www.edocumentview.com/SCL include the Notice of Annual Meeting of Stockholders, Proxy Statement, Form of Proxy, Annual Report to Stockholders, and Form 10-K for the year 2010.

Directions to the Annual Meeting of Stockholders are available at http://www.stepan.com, under “Investors—“Investor Relations—Annual Meeting” for those stockholders who plan to attend the meeting.Annual Meeting.

By order of the Board of Directors,

KATHLEEN O. SHERLOCKH. EDWARD WYNN

    Assistant Secretary

Northfield, Illinois

March 31, 201127, 2013

The Board of Directors extends a cordial invitation to all stockholders to attend the meeting.Annual Meeting. Whether or not you plan to attend the meeting, please mark, sign and mail the enclosed proxy card in the return envelope provided as promptly as possible.

As a reminder, brokers may not vote your shares for non-routine matters such as the election of directors, the approval to increase the number of an equity compensation plan,authorized shares of the Company’s Common Stock, or the advisory vote on the compensation paid toof the Company’s named executive officers (“Say-on-Pay” vote), or the advisory vote on the frequency of voting on future Say-on-Pay votes in the absence of your specific instructions as to how to vote. Therefore, we urge you to provide your broker with voting instructions by returning your proxy card so your vote for all proposals can be counted.

March 31, 201127, 2013

PROXY STATEMENT

For the Annual Meeting of Stockholders of

STEPAN COMPANY

Edens Expressway and Winnetka Road

Northfield, Illinois 60093

To be held at 9:00 a.m. (CST)(CDT) on May 3, 2011April 30, 2013

INFORMATION CONCERNING SOLICITATION AND VOTING

The enclosed proxy is solicited by the Board of Directors and the Company will bear the entire expense of solicitation. Such solicitation is being made by mail, and the Company’s officers and employees may solicit proxies from stockholders personally or by telephone, mail or other means. The Company will make arrangements with the brokers, custodians, nominees and other fiduciaries who request the forwarding of solicitation material to the beneficial owners of shares of the Company’s stock held of record by such brokers, custodians, nominees and other fiduciaries, and the Company will reimburse them for their reasonable out-of-pocket expenses.

At the close of business on March 4, 2011,1, 2013, the record date for the meeting, there were 520,08961,935 shares of the Company’s 5 ¹/₂% Convertible Preferred Stock (“Preferred Stock”) outstanding, each share of which is convertible into 1.141752.2835 shares of the Company’s Common Stock (“Common Stock”) and is entitled to 1.141752.2835 votes on each matter to be voted on at the meeting, and, assuming all outstanding shares of Preferred Stock were converted, there would have been 10,752,94822,183,547 shares of Common Stock outstanding, each share of which is entitled to one vote on each matter to be voted on at the meeting. The beneficial ownership, executive compensation and director compensation information presented in this proxy statement reflect the effects, where applicable, of the two-for-one (2-for-1) stock split of the Common Stock that was paid on December 14, 2012.

This proxy statement and proxy are first being sent or givendistributed to stockholders commencing on or about March 31, 2011.27, 2013.

You may either vote “FOR” or “WITHHOLD” authority to vote for each of the nominees for the Board of Directors. You may vote in favor of holding the advisory vote on named executive officer compensation “EVERY ONE YEAR,” “EVERY TWO YEARS” OR “EVERY THREE YEARS,” or you may choose to “ABSTAIN” from voting on this proposal. You may vote “FOR,” “AGAINST” or “ABSTAIN” on the other proposals.

In connection with any other business that may properly come before the meeting, of which the Board of Directors is not currently aware, votes will be cast pursuant to the authority granted by the enclosed proxy in accordance with the best judgment of a majority of the persons present andindividuals acting under the proxy.

If you submit your proxy but abstain from voting or withhold authority to vote on one or more matters, your shares will be counted as present at the meeting for the purposes of determining a quorum. Your shares also will be counted as present at the meeting for the purpose of calculating the vote on the particular matter with respect to which you abstained from voting or withheld authority to vote. Any proxy given pursuant to this solicitation may be revoked by the stockholder at any time prior to the voting of the proxy.

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If you abstain from voting on a proposal, your abstention has the same effect as a vote against that proposal. If you withhold your authority to vote for any director nominee, your withholding has the same effect as a vote against that director.

If you hold your shares in street name and do not provide voting instructions to your broker, custodian, nominee or other fiduciary, your shares will be considered “broker non-votes” and will not be voted on any non-routine matters, which include the election of directors, the approval to increase the number of authorized shares of the equity compensation plan, the advisory vote on executive compensation,Company’s Common Stock, and the advisory vote on the frequency of future stockholder advisory votes onapproving named executive officer compensation. Shares that constitute broker non-votes may be voted on the ratification of auditors and will be counted as present at the meeting for the purpose of determining a quorum, but will not be entitled to vote on non-routine proposals. Please instruct your broker or bank so your vote can be counted on all proposals.

The required quorum at the Annual Meeting of Stockholders is a majority of the outstanding shares of the Company’s voting stock as of the record date. In order to ensure the presence of holders of shares representing the necessary quorum at the Annual Meeting, of Stockholders, please mark, sign and return the enclosed proxy promptly in the envelope provided. No postage is required if mailed in the United States. Even if you sign and return your proxy, you are invited to attend the meeting.

The Company has adopted a procedure called “householding,” which the Securities and Exchange Commission (“SEC”) has approved. Under this procedure, the Company expects to deliver a single copy of the proxy materials to multiple stockholders who share the same address unless the Company has received contrary instructions from one or more of the stockholders. This procedure reduces the Company’s printing and mailing costs, and the environmental impact of the Company’s annual meetings. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or verbal request, the Company will deliver promptly a separate copy of the proxy materials to any stockholder at a shared address to which the Company delivered a single copy of these documents. To receive a separate copy of the proxy materials, stockholders may write or call the Company at the following contact: Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093; Telephone: (847) 446-7500.

ELECTION OF DIRECTORS

Stockholders and the persons named in the enclosed proxy will vote, pursuant to the authority granted by the stockholder in the enclosed proxy, on the election of Messrs. Joaquin Delgado andMichael R. Boyce, F. Quinn Stepan Jr.and Edward J. Wehmer as Directors of the Company to hold office until the Annual Meeting of Stockholders to be held in the year 2014.2016.

In the event any one or more of such nominees is unable to serve as Director, votes will be cast, pursuant to the authority granted in the enclosed proxy, for such person or persons as may be designated by the Board of Directors. The Board of Directors at this time is not aware of any nominee who is or will be unable to serve as Director, if elected.

Under the Company’s Restated Certificate of Incorporation and By-laws, Directors are elected by a plurality of the voting power of the shares of Preferred Stock and Common Stock present in person or represented by proxy at the meeting and entitled to vote, voting together as a single class. The outcome of the election will not be affected by holders of shares of Preferred Stock or Common Stock that withhold authority to vote in the election of Directors.

The Board of Directors is divided into three classes serving staggered three-year terms. Directors for each class are elected at the Annual Meeting of Stockholders in the year in which the term for their class expires.

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Nominees Forfor Director

The following table sets forth certain information about the nominees for Director:

* Less than one percent of outstanding shares of Common Stock.

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PROPOSAL: The Board of Directors recommends that the stockholders vote FOR the election of Messrs. Joaquin Delgado andMichael R. Boyce, F. Quinn Stepan Jr.and Edward J. Wehmer to the Board of Directors each for a three-year term.

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Directors Whose Terms Continue

The following table sets forth certain information about those Directors who are not up for re-electionelection as their respective term of office does not expire this year:

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*Less than one percent of outstanding shares of Common Stock.

Family Relationships

F. Quinn Stepan, Jr. is the son of F. Quinn Stepan.

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SECURITY OWNERSHIP

Security Ownership of Certain Beneficial Owners

As of March 4, 2011,1, 2013, the following persons were the only persons known to the Company to beneficially own more than five percent of the Company’s Common Stock:

As of March 4, 2011, the following persons1, 2013, there were the onlyno persons known to the Company to beneficially own more than five percent of the Company’s Preferred Stock:Stock.

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Security Ownership of Management

The following table sets forth, as of the close of business on March 4, 2011,1, 2013, the security ownership of each Executive Officer listed in the Summary Compensation Table in this proxy statement, each Director and nominee for Director, and all Directors and Executive Officers as a group:

* Less than one percent of outstanding shares of Common Stock.

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Equity Compensation Plan Information

The following table provides information as of December 31, 2010,2012, about the Company’s securities that may be issued under the Company’s existing equity compensation plans, all of which have been approved by the stockholders:

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SectionSECTION 16(a) Beneficial Ownership Reporting ComplianceBENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder require the Company’s Executive Officers and Directors, and persons who own more than 10 percent of the Common Stock or Preferred Stock, to file reports of beneficial ownership and changes in beneficial ownership of Common Stock or Preferred Stock with the SEC, the New York Stock Exchange, the Chicago Stock Exchange and the Company.SEC. Based solely upon a review of such reports filed with the copies of such forms received by it during or with respect to its most recent fiscal year, orSEC and written representations from certain reporting persons, the Company believes that all such required reports have been timely filed except for four late reports for four transactions by each of the followingtwo Company Executive Officers: Messrs. F. Quinn Stepan, F. Quinn Stepan, Jr., James E. Hurlbutt, Gregory Servatius, John V. Venegoni, Robert J. Wood, and H. Edward Wynn. These late reports were caused by a minor administrative error which has been corrected for reporting deferred quarterly dividend equivalents pursuant to a new 2010 incentive compensation plan. All such transactions have since been properly reported. In addition,Officers. Mr. Frank Pacholec filed one late report for twelve transactions occurring during 2005, 2006 and 2007 due to inadvertent omissions of the reporting of ten dividend reinvestment purchases of Common Stock and two purchases of Common Stock in 2006, which were all reported on a Form 4 upon discovery of the omissions. Mr. H. Edward Wynn filed one late report for two transactions due to an inadvertent omission of the reporting of two transactions eachdividend reinvestment purchases of Common Stock in both 2009 and 20102008 which were also filed by Mr. F. Quinn Stepan due to minor administrative errors which have been corrected to comply withreported on a Form 4 upon discovery of the minimum required distribution rules for the Company’s two Employee Stock Ownership Plans. All such transactions have since been properly reported.omissions.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Policies and Procedures for Approving Related Person Transactions

The Company adopted a written policy entitled “Stepan Company Related Party Transactions Policy and Procedures” which was initially approved by the Audit Committee of the Board of Directors in February 2007, and has been annually reviewed by the Audit Committee at each subsequent February meeting (“Related Party Transactions Policy”). This policy applies to transactions (“Related Party Transactions”) involving the Company and a Related Party, which is defined as a person or entity who is a Company executive officer, Director, or nominee for election as a Director, or a beneficial owner of 5% or more of the Company’s stock, or an immediate family member of these persons. The Related Party Transactions Policy states that the Company will enter into or ratify Related Party Transactions only when the Board of Directors, acting through the Audit Committee or as otherwise set forth in the Related Party Transactions Policy, approves the Related Party Transaction after determining that it is in, or is not inconsistent with, the best interests of the Company and its stockholders. The Audit Committee will review the material facts of all Related Party Transactions underpursuant to the Related Party Transactions Policy, as discussed below, in order to make such determination and to decide whether to approve or disapprove such Related Party Transaction. No Director may participate in any discussion orinvolving the approval of a Related Party Transaction for which he or she is a Related Party, except that the Director must provide any material information concerning the Related Party Transaction requested by the Audit Committee.

As set forth in the Related Party Transactions Policy, the Audit Committee has reviewed and approved certain types of Related Party Transactions and determined that the following types of Related Party Transactions will be generally deemed to be pre-approved under the terms of the Related Party Transactions Policy without further review by the Audit Committee: employment of executive officers; director compensation/reimbursement; transactions where all employees or stockholders receive proportional benefits; transactions with another company at which a Related Party’s only relationship is as an employee (other than as an executive officer) or director of that company or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenues; and certain Company charitable contributions to charitable or non-profit organizations if the Related Party’s only relationship is as an employee (other than as an executive officer) or a director or acting in a similar capacity at that organization, if the aggregate amount involved does not exceed the greater of $1 million or 2% of that organization’s total annual receipts. In addition, the Board of Directors has delegated to the Audit Committee Chairman the authority to approve or ratify any Related Party Transaction with a Related Party in which the aggregate amount involved is expected to be less than $120,000. All other Related Party Transactions must be approved by the Audit Committee pursuant to the procedures discussed below.

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At each calendar year’s first regularly scheduled Audit Committee meeting, the Company’s management will submitsubmits for the Audit Committee’s consideration any proposed Related Party Transaction it would like the Company to enter into during that calendar year, including the proposed aggregate value of such transaction, as applicable. After the first calendar year meeting, any additional proposed Related Party Transactions must be submitted to the Audit Committee for approval. If the Audit Committee determines that a proposed transaction exceeds $120,000 and is a Related Party Transaction that requires review and approval by the Audit Committee, the proposed Related Party Transaction and relevant factors will beare reviewed by the Audit Committee. SuchRelevant factors considered by the Audit Committee forin its evaluation of a Related Party Transaction include the Related Party’s relationship to the Company and the Related Party’s interest in the transaction; the material facts of the proposed Related Party Transaction, including the proposed aggregate value of the transaction; the benefits to the Company of the proposed Related Party Transaction; if applicable, the availability of other sources of comparable products or services; and an assessment of whether the terms of the proposed Related Party Transaction are comparable to the terms available to an unrelated third party or to employees generally, as applicable. For ongoing transactions, the Audit Committee will taketakes into consideration the Company’s contractual obligations under the transactions and, based on all available relevant facts and circumstances, determinedetermines if the Related Party Transaction remains in the best interests of the Company and its stockholders. After review, the Audit Committee will approveapproves or disapprovedisapproves such transactions and at each subsequently scheduled meeting, the Company will updateupdates the Audit Committee as to any material change to those transactions.

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In the event the Company’s Chief Executive Officer, Chief Financial Officer or General Counsel becomes aware of a Related Party Transaction that has not been previously approved or ratified underpursuant to the Related Party Transactions Policy pursuant to the above procedures, if the transaction is pending, it will beis submitted to the Audit Committee promptly for its review based on the factors above. Based on its conclusions, the Audit Committee will evaluateevaluates all options, including ratification, amendment or termination of the Related Party Transaction. If the transaction is ongoing or has been completed, the Audit Committee will evaluateevaluates the transaction, taking into account the same factors described above, to determine if rescission of the transaction is appropriate and will requestrequests that the General Counsel evaluate the Company’s controls and procedures to determine why the transaction was not submitted to the Audit Committee for prior approval pursuant to the Related Party Transactions Policy and whether any changes to these procedures are recommended.

Transactions with Related Persons, Promoters and Certain Control Persons

Mr. Richard Stepan (son of F. Quinn Stepan and brother of F. Quinn Stepan, Jr.) is a current Company employee at the Company’s Millsdale,Northfield, Illinois facility.offices. Mr. Richard Stepan is neither a Company officer nor a Director or nominee for Director. As an employee of the Company, Mr. Richard Stepan receives a base salary, short-term incentive compensation as appropriate for his position, and other regular and customary employee benefits generally available to all Company employees. With respect to fiscal 2010,2012, Mr. Richard Stepan was paid a base salary of $128,750,$143,390, bonus/incentive compensation of $19,838, and certain relocation expenses under the Company’s relocation program of $6,990,$14,596, and participated in other regular and customary employee benefit programs generally available to all Company employees. Pursuant to the Company’s Related Party Transactions Policy, the Audit Committee has reviewed this transaction and has determined that it is in the best interests of the Company and its stockholders to permit the Company to continue to employ Mr. Richard Stepan. Accordingly, the Audit Committee has approved this transaction under the Related Party Transactions Policy pursuant to the procedures described above.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Corporate Governance Guidelines and Code of Conduct

The Company is committed to having sound corporate governance principles and has adopted Corporate Governance Guidelines and a Code of Conduct to maintain those principles. The Company’s Code of Conduct applies to all of the Company’s officers, directors and employees, including the Company’s PrincipalChief Executive Officer and PrincipalChief Financial Officer. The Company’s Corporate Governance Guidelines and Code of Conduct are available at http://www.stepan.com, under “Investors – “Investor Relations—Corporate Governance.” Stockholders may also request a free printed copy of the Company’s Corporate Governance Guidelines and Code of Conduct by contacting the Company’s Secretary at Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093.

Board Committees

The Board of Directors has a standing Audit Committee, Compensation and Development Committee, and Nominating and Corporate Governance Committee. All three committees are composed entirely of independent directors in accordance with the rules of the New York Stock Exchange and as described below under “Director Independence.”

The Audit Committee held seveneight meetings in 2010.2012. The responsibilities of the Audit Committee include annual selection and engagement of the Company’s independent registered public accounting firm, meeting with the Company’s independent registered public accounting firm before the year-end audit to review the proposed fees and scope of work of the audit, meeting with the Company’s independent registered public accounting firm at the completion of the year-end audit to review the results of the audits of the Company’s financial statements and internal control over financial reporting, meeting with the Company’s independent registered public accounting firm prior to the Company’s filing of each quarterly report on Form 10-Q and the annual report on Form 10-K, review of the independent registered public accounting firm’s communication setting forth findings and suggestions regarding internal controls, financial policies and procedures and management’s response to that communication, review of the internal audit program of the Company, review of unusual or significant financial transactions, review and approval or disapproval of Related Party Transactions pursuant to the Company’s Related Party Transactions Policy, and preparation of an Audit Committee report as required by the SEC to be included in this proxy statement.

The members of the Audit Committee in 20102012 were Messrs. Michael Boyce, Dearth (elected April 20, 2010)24, 2012), Thomas Grojean, Gary Hendrickson, GregoryDelgado, Lawton Robert Potter (retired April 20, 2010) and Edward Wehmer (Chairman), all of whom are independent directors in accordance with the rules of the New York Stock Exchange and the SEC and as described below under “Director Independence.” The Board of Directors has determined that Mr. Wehmer is qualified as an Audit Committee financial expert within the meaning of SEC regulations. In addition, the Board of Directors has determined that Mr. Wehmer has accounting and related financial management expertise within the meaning of the rules of the New York Stock Exchange. None of the Audit Committee members serve on the audit committee of more than two public companies.

The report of the Audit Committee is included in this proxy statement. The charter of the Audit Committee is available at http://www.stepan.com, under “Investors—“Investor Relations – Corporate Governance.” Stockholders may also request a free printed copy of the charter by contacting the Company’s Secretary at Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093.

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The Compensation and Development Committee held three meetings in 2010.2012. The responsibilities of the Compensation and Development Committee include reviewing and, if appropriate, adjusting the salaries of the executive officers of the Company each year,annually, approving all management incentive awards, approving proposed

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grants of stock awards, providing advice to the Company regarding executive development and succession planning, approving the Company’s Compensation Discussion and Analysis, and preparing the Compensation and Development Committee Report as required by the SEC to be included in this proxy statement. The members of the Compensation and Development Committee in 20102012 were Messrs. Michael Boyce, Dearth (elected April 20, 2010)24, 2012), Thomas Grojean, Gary Hendrickson, GregoryDelgado, Lawton (Chairman), Robert Potter (retired April 20, 2010) and Edward Wehmer, all of whom are independent directors in accordance with the rules of the New York Stock Exchange and as described below under “Director Independence.”

Both the Compensation Discussion and Analysis and the Compensation and Development Committee Report are included in this proxy statement. The charter of the Compensation and Development Committee is available at http://www.stepan.com, under “Investors—“Investor Relations – Corporate Governance.” Stockholders may also request a free printed copy of the charter by contacting the Company’s Secretary at Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093.

The Nominating and Corporate Governance Committee held three meetings in 2010.2012. The responsibilities of the Nominating and Corporate Governance Committee include assisting the Board of Directors by identifying individuals qualified to become board members and recommending to the Board of Directors the Director nominees for election to the next annual meetingBoard of stockholders,Directors, developing and recommending to the Board of Directors the guidelines for corporate governance applicable to the Company, leading the Board of Directors in its annual review of the Board of Directors’ performance, and recommending to the Board of Directors the Directorsmembers for each Board committee.

The members of the Nominating and Corporate Governance Committee in 20102012 were Messrs. Michael Boyce (Chairman), Dearth (elected April 20, 2010)24, 2012), Thomas Grojean, Gary Hendrickson (Chairman effective April 20, 2010), GregoryDelgado, Lawton Robert Potter (Chairman until his retirement on April 20, 2010) and Edward Wehmer, all of whom are independent directors in accordance with the rules of the New York Stock Exchange and as described below under “Director Independence.” The charter of the Nominating and Corporate Governance Committee is available at http://www.stepan.com, under “Investors—“Investor Relations—Corporate Governance.” Stockholders may also request a free printed copy of the charter by contacting the Company’s Secretary at Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093.

The Nominating and Corporate Governance Committee reports annually to the Board of Directors onreports an assessment of the Board of Directors’ performance.performance to the Board of Directors. The Chairman of the Nominating and Corporate Governance Committee initially discusses the assessment with the Chairman, and if desired by any Director, the assessments are also discussed at the Executive Sessions of the non-management Directors. This assessment evaluates the Board of Directors’ contribution to the Company in its entirety and reviews areas in which the Board of Directors and/or management believe a stronger contribution could be made. The Nominating and Corporate Governance Committee is responsible for evaluating the performance of current members of the Board of Directors at the time they are considered for re-nomination to the Board of Directors.

Board Meetings and Attendance

During 2010,2012, there were five regular meetings and one special meeting of the Board of Directors. During 2010,2012, all of the Directors attended greater than 75 percent of the total number of meetings of the Board of Directors and the meetings of committees of the Board of Directors of which each Director was a member. The

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While all Directors are encouraged to attend, the Company does not have a formal policy regarding Directorrequiring attendance at the Company’s Annual Meeting of Stockholders. All Directors attended the 20102012 Annual Meeting of Stockholders and planare currently expected to attend the 20112013 Annual Meeting of Stockholders.

Director Nomination Process

It is the policy of the Nominating and Corporate Governance Committee to consider properly submitted stockholder nominations for candidates for membership on the Board of Directors. In evaluating such

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nominations, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board of Directors to address the membership criteria. Any stockholder nominations proposed for consideration by the Nominating and Corporate Governance Committee must comply with the requirements set forth in the Company’s By-laws. Among other things, a stockholder must give written notice containing the information required by the Company’s By-laws to the Secretary of the Company at Stepan Company, Secretary’s Office, Edens Expressway and Winnetka Road, Northfield, Illinois 60093. The deadline to submit a director nomination for next year’s annual meetingthe 2014 Annual Meeting of stockholdersStockholders is set forth in the “Stockholder“2014 Stockholder Proposals” section below. The Secretary delivers all correspondence to the Nominating and Corporate Governance Committee Chairman without first screening the correspondence.

The Corporate Governance Guidelines contain the Board of Directors’ membership criteria that apply to nominees recommended by the Nominating and Corporate Governance Committee for a position on the Board of Directors. Under these criteria, members of the Board of Directors should possess qualities that include strength of character, an inquiring and independent mind, practical wisdom and mature judgment. In addition to these qualities, Director nominees should also possess recognized achievement, an ability to contribute to some aspect of the Company’s business, and the willingness to make the commitment of time and effort required of a Director. The Nominating and Corporate Governance Committee’s process for identifying and evaluating Director nominees for Director includes recommendations by stockholders, non-management Directors and executive officers, a review and background check of specific candidates, an assessment of the candidate’s independence under the director independence standards described below, and interviews of Director candidates by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee’s evaluation of a nominee recommended by a stockholder would consider the general criteria and required information previously described in this section, and any other factors the Nominating and Corporate Governance Committee deems relevant.

Dr. Joaquin Delgado is a nominee for DirectorEach of Messrs. Boyce, Stepan and Wehmer are current Directors who has not been previously elected by the stockholders. At the direction of the Nominating and Corporate Governance Committee, an executive search firm was retained to help identify and facilitate the screening and interview process of candidates for Director. Dr. Delgado was identified by the search firm as a potential Director candidate. Dr. Delgado was subsequently interviewed by members of the Nominating and Corporate Governance Committee. Based on all of these factors, it was determined by the Nominating and Corporate Governance Committee that Dr. Delgado possesses the qualities, achievements, experience and capabilities necessary to serve as a Company Director. Mr. F. Quinn Stepan, Jr. is a current Director who waswere previously elected by the stockholders. The term for Mr.each of Messrs. Boyce, Stepan Jr.and Wehmer expires in 2011.2013. The nominations of Messrs. DelgadoBoyce, Stepan and Stepan, Jr.Wehmer to stand for election for a three-year term at the 20112013 Annual Meeting of Stockholders have each been reviewed and approved by the Nominating and Corporate Governance Committee and the Board of Directors.

Board Diversity

The Board of Directors does not have a formal policy with respect to diversity. However, in identifying Director nominees, the Nominating and Corporate Governance Committee and the Board of Directors consider a broad definition of diversity, including but not limited to, diversity of professional experience, education and skills. For example, the Nominating and Corporate Governance Committee and the Board of Directors have

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considered operational experience, international experience, technical experience, financial experience, and experience related to the Company’s current product lines and industries. If the Nominating and Corporate Governance Committee utilizes an outside search firm to identify Director nominees, it instructs the search firm to consider broadly-defined diversity in identifying potential nominees.

Director Independence

For purposes of determining director independence, the Company has adopted the following standards in compliance with the New York Stock Exchange director independence standards as currently in effect. No Director qualifies as “independent” unless the Board of Directors affirmatively determines that the Director has no material relationship with the Company or any of its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company or any of its subsidiaries). In addition, a Director is not independent if:

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Under the New York Stock Exchange rules and the Company’s Corporate Governance Guidelines, at least a majority of the Company’s Directors and each member of the Audit Committee, Compensation and Development Committee, and Nominating and Corporate Governance Committee must meet the independence standards set forth above. The Board of Directors has determined that each of Messrs. Michael R. Boyce, Gary E. Hendrickson,Randall S. Dearth, Joaquin Delgado, Gregory E. Lawton and Edward J. Wehmer has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and is independent under the standards set forth above. In addition, the Board of Directors has also determined that Joaquin Delgado, a nominee for Director, has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and would be deemed independent under the standards set forth above should he be elected by the stockholders as a Director of the Company at the 2011 Annual Meeting of Stockholders.

Mr. F. Quinn Stepan and Mr. F. Quinn Stepan, Jr. are not deemed independent under the rules of the New York Stock Exchange since Mr. F. Quinn Stepan has served as the Chairman of the Company since November 1984 and Mr. F. Quinn Stepan, Jr. has served as the President and Chief Executive Officer of the Company since January 2006.

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Board Leadership Structure

The Board of Directors regularly reviews its leadership structure in light of the Company’s then current needs, trends, internal assessments of Board effectiveness, and other factors. The Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board believes it is in the best interests of the Company currentlyto make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Company separates the Chief Executive Officer and Chairman positions. The positions have been separate since 2006.Company’s Chief Executive Officer is generally responsible for the Company’s day-to-day operations and strategic planning. In addition to chairing the Board of Directors, the Chairman provides strategic advice based on his extensive industry experience and knowledge of the Company’s operations. The Board of Directors believes that this structure is appropriate atit benefits from the current time because it enables the Company to retain on the Board of Directors theChairman’s experience and perspectives of a major shareholderexpertise in the Company’s industry and former Chief Executive Officer,business, as well as the skills and talentsChief Executive Officer’s understanding of the current Chief Executive Officer. TheCompany’s ongoing operations.

While the Board of Directors does not have a Lead Director.Director, the independent directors regularly meet in Executive Sessions without the Chairman, the Chief Executive Officer or management present in accordance with the Company’s Corporate Governance Guidelines.

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Director Qualifications

All Directors and nominees for Director possess strong executive leadership experience based on their individual experience from their positions as executives of various corporations. Certain individual qualifications and skills of each Director and nominee for Director that were considered in nominating such individual to the Board of Directors are as follows:

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Risk Management

The Board of Directors takes an active role in overseeing the Company’s financial and non-financial risks. The Audit Committee, which is chaired by Mr. Wehmer, an Audit Committee financial expert, takes a lead role in overseeing Company risks. The Audit Committee receives reports from the Company’s Director of Internal Audit, the Chief Financial Officer, and the General Counsel, all of whom are responsible for various aspects of the Company’s risk management. The Director of Internal Audit reports directly to the Audit Committee. The Audit Committee meets with the Company’s external auditors, separately from management.

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The Compensation and Development Committee, which is chaired by Mr. Lawton, takes the lead role in overseeing the management of risks as they relate to the Company’s compensation policies and practices. For 2010,2012, the Compensation and Development Committee reviewed these compensation policies and practices and did not identify any risks that are reasonably likely to have a material adverse effect on the Company.

Executive Sessions

Executive Sessions of non-management Directors will beare held at least two times per year. At least one of the Executive Sessions each year will beis limited to the Company’s independent Directors. Executive Sessions are generally held by the independent Directors after every regular Board of Directors meeting and after most Board committee meetings. In 2010, three Executive Sessions were held by the independent Directors and chaired by Mr. Hendrickson. In addition, Executive Sessions were also held after most Board committee meetings during 2010 and were chaired by the respective chairman of the Board committee. The Executive Sessions after all regular Board of Directors meetings are scheduled and chaired by the Chairman of the Nominating and Corporate Governance Committee. Effective February 2011, Mr. Boyce serves as the Chairman of the Nominating and Corporate Governance Committee. Any non-management Director can request that an additional Executive SessionSessions be scheduled. In 2012, four Executive Sessions without management were held by the independent Directors and chaired by Mr. Boyce. In addition, Executive Sessions were also held after most Board committee meetings during 2012 and were chaired by the respective chairman of the Board committee.

Communication with the Board

A stockholder may communicate with the Board of Directors by writing c/o Secretary’s Office, Stepan Company, Edens Expressway and Winnetka Road, Northfield, Illinois 60093. Mail addressed to a specific Director or CommitteeBoard committee will be delivered to that Director or Committee.Board committee. The Secretary delivers all correspondence without first screening the correspondence.

Compensation Committee Interlocks and Insider Participation

None

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

RoleSummary of theExecutive Compensation and Development Committeein 2012

TheIn 2012, the Company and the Compensation and Development Committee of the Board of Directors (defined within this Compensation Discussion and Analysis section as the “Committee”) applied the compensation policies and principles described in this Compensation Discussion and Analysis in determining compensation for the individuals named in the Summary Compensation Table. Those individuals are referred to herein as the named executive officers (“NEOs”). Specifically:

Role of the Compensation and Development Committee

The Committee is responsible for overseeing the establishment and administration of the Company’s policies, programs and procedures for compensating the Company’s executive management, as further described below. The Committee is also responsible for providing advice to the Company regarding executive development and succession planning. The Committee acts pursuant to a charter, which is available on the Company’s website at http://www.stepan.com, under “Investors—“Investor Relations—Corporate Governance.”

The individuals who served as the Company’s Principal Executive Officer and Principal Financial Officer during fiscal year 2010, as well as the Company’s three other most highly compensated executive officers during fiscal year 2010 included in the Summary Compensation Table, are referred to in this proxy statement as the named executive officers (“NEOs”). The executive officers include the NEOs and the other executive officers of the Company.

Compensation Objectives

The overall objectives of the Company’s compensation programs are as follows:

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Compensation Philosophy

The basic premise of the Company’s executive compensation philosophy is to pay for performance. The Company’s intention is to foster a performance-driven culture with competitive total compensation as a key driver for all employees. Compensation levels commensurate with Company performance align the interests of itsour employees with the interestinterests of itsour stockholders.

The Company’s guiding philosophy in setting executive compensation is that the compensation of executive officers should reflect the scope of their job responsibilities and level of individual and corporate performance achieved. Executive compensation should be competitive internally, as well as externally, to like or comparable positions based on job descriptions and responsibilities at similarly sized companies within general industry and/or the chemical industry,Company’s industries and other appropriate related industry benchmarks or survey information. The Company’s compensation philosophy is reviewed at least annually by the Committee.

The effectiveness of the executive compensation program is primarily measured by Company performance, stock price appreciation, the ability of the Company to attract and retain executive officers, and comparison against other relevant, external benchmarks as needed.

The Committee generally does not consider the impact of previously awarded compensation in determining current executive total compensation. The Committee does, however, use both aggregate general industry survey data as well as a chemical industry peer group to benchmark executive compensation annually as described

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below under “Benchmarking“Use of Industry Surveys and Peer Group Data.” Except for the limits regarding incentive compensation as described below, the Committee does not use specific policies to allocate between cash and non-cash compensation or between short-term and long-term compensation.

Compensation Consultant

The Committee has not retained its own consultant to provide overall compensation advice. However, in the event the Committee does retain a compensation consultant, the Committee will consider the relevant factors necessary to determine the consultant’s independence and whether their work raises any conflicts of interest. On an ongoing basis, the Committee and the Company utilize compensation survey data and software purchased from a compensation consultant, Towers Watson, when making base compensation decisions for Company executives. The Committee and the Company also receive long-term incentive survey data from Towers Watson annually as well as total compensation benchmark information.

Compensation Consultant Fees

The aggregate fees paid by the Company for all services provided by compensation consultants, including services provided by Towers Watson, did not exceed $120,000 for the year ended December 31, 2010.2012.

Role of Executives in Establishing Compensation

The Committee determines the compensation of the Chairman and the Chief Executive Officer. The Chief Executive Officer and the Vice President—Human Resources make recommendations to the Committee regarding compensation for all other executive officers, including the NEOs. The Committee then reviews these recommendations and approves the final compensation for these individuals. All recommendations made to the Committee and all determinations made by the Committee are based upon the Company’s policies and guidelines and other relevant factors outlined in the “Benchmarking“Use of Industry Surveys and Peer Group Data” and “Elements of Compensation” sections below.

The advisory vote in 2012 was the second consecutive year that the Company’s Say-on-Pay vote was overwhelmingly supported by the stockholders with the approval of over 90% of those stockholders present at the 2012 Annual Meeting of Stockholders in person or by proxy. The Committee acknowledges and values the

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feedback from the Company’s stockholders on the annual Say-on-Pay vote and believes that these results demonstrate stockholder support of the Company’s overall executive compensation approach, which is primarily designed as performance-based and aligned with stockholders’ interests. The Committee considered and will continue to consider the outcome of these advisory votes when determining future executive compensation arrangements.

BenchmarkingUse of Industry Surveys and Peer Group Data

The Company determines compensation by considering two sources: industry surveys and compensation information from a select group of peer companies. The Company reviews survey data for total compensation, including base salary, short-term incentives and long-term incentives, annually or otherwise periodically, as appropriate.

The Company subscribes to compensation survey data supplied by Towers Watson for the purpose of comparing total compensation. For the executive officers, including the NEOs, the Company reviews compensation using the Towers Watson 2012 Compensation Data Bank General Industry Executive Compensation Survey Report on Top Management Compensation. The Towers Watson Survey Report on Top Management CompensationReport—U.S. This report is comprised of data from more than 1,600435 organizations representing a variety of industries, sizes of companies and geographic areas. The Company utilizes survey data for the position or positions that most closely matches the job description of each NEO or executive officer position, and for the companies that are most closely aligned with characteristics of the Company, including comparable industry, comparable size (revenue and employees) and other measures of comparison as appropriate and available.

The Company also uses a Chemical Industry chemical industry peer group of 14 companies (“Peer Group of 12 companiesGroup”) as an additional reference point for data regarding total compensation. The companies included in the Chemical Industry Peer Group were selected because of their chemical industry affiliation and similarity to the Company in size and/or business. The following companies comprisecomprised the Chemical Industry Peer Group used in reviewing and establishing 2010considering 2012 total compensation: Albemarle Corporation; Arch Chemicals,A. Schulman, Inc.; Ashland Inc.; Cabot Corporation; Cambrex Corporation; Chemtura Corporation; Cytec Industries Inc.; Ferro Corporation; Georgia Gulf Corporation; H.B. Fuller Company; The LubrizolInnospec Inc.; Kraton Performance Polymers, Inc.; NewMarket Corporation; OM Group, Inc.; PolyOne Corporation; and NewMarketSensient Technologies Corporation.

18The Company performs periodic evaluations of the Peer Group in order to ensure the Company is comparing itself with companies who have a specialty chemicals focus, who are within a reasonable range of Company market capitalization size, who are members of the American Chemistry Council, companies which identify the Company in their industry peer groups and/or other related factors. An evaluation was made in 2011 and changes were made to the Peer Group at that time. The Committee believes the current Peer Group remains an appropriate comparison group.

Based on a review of this information,the Towers Watson and Peer Group survey data, the Company targets total compensation for executive officers to be in the median range (plus or minus 10% of the 50^th percentile) of the survey data. All NEOs’ and executive officers’ total compensation amounts were considered to be within appropriate and reasonable levels as compared to the survey data considering experience level, time in position, global job grades and any other relevant factors.both external and internal equity evaluations.

The Company has a long-term target total compensation mix of 40% base salary, 20% short-term incentives and 40% long-term incentives for executive officers’ compensation. This target objective provides an appropriate mix of short-term and long-term rewards and incentives to encourage the necessary focus and motivation to achieve outstanding results on an ongoing basis, both in the short-term and long-term. In addition, the combined focus on both short-term and long-term objectives aligns Company and stockholders’ interests. The allocation of compensation, emphasizing both short-term and long-term goals, is common market practice and appropriate in order to reduce the possibility of any material adverse effect on the Company due to the Company’s

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compensation policies and practices. Short-term incentives for executive officers are based on individual and Company performance. Long-term incentives for executive officers are based only on Company performance. This mix assumes above average Company performance and can vary considerably if performance is either below average or at a superior level. For 2010,2012, the actual total compensation mix for all nine executive officersthe NEOs was 49.6%40.4% base salary, 22.3%29.4% short-term incentives and 28.1% long-term incentives. For the NEOs, the mix was 47.6% base salary, 24.3% short-term incentives and 28.1%30.2% long-term incentives.

Elements of Compensation

For the fiscal year ended December 31, 2010,2012, the principal elements of compensation for the executive officers, including the NEOs, were as follows:

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Base Salary

The Company has established salary grades and ranges for all employees, including all of the NEOs. The grades range from 3 to 19, and within each grade, there are three tiers. Salary grades reflect the responsibility level of the position, i.e., positions requiring greater responsibility have a higher number salary grade. Salary tiers reflect the employee’s individual performance and experience. The salary range for each grade and tier is primarily based on survey data to the 50^th percentile. This enables the Company to ensure pay equity among executives and all employees that is market competitive. A complete list of salary grades and tiers is published annually to all management employees.

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The Committee, taking into consideration the performance of the Company, the Company’s compensation philosophy, the survey data, and the Company’s salary grades and tiers, reviews and determines the Chief Executive Officer’s salary and the Chairman’s salary on an annual basis. The Chief Executive Officer and the Vice President—Human Resources make recommendations to the Committee regarding compensation for all other executive officers. The Committee has the discretion to approve such recommendations or revise the recommended amounts, higher or lower, based upon each specific executive officer’s performance. The Chief Executive Officer’s salary range is determined based on the same factors and criteria as those of the other NEOs, executive officers and all salaried employees.

See the narrative to the Summary Compensation Table below for additional information regarding base salaries for the NEOs in 2010.

Short-Term Incentive Compensation

The purpose of the Company’s short-term incentive compensation (annual bonus) is to promote improved year-over-year financial performance,performance; to motivate, attract and retain executive, managerial and key employees of outstanding ability,ability; and to align participants’ interests directly with Company financial targets. The total amount of short-term compensation is a percentage of the executive’s or employee’s actual base salary earned each calendar year. Because more senior managers have morea greater ability to impact Company results, a greatersignificant percentage of their total compensation is at-risk in the form of the annual bonus.

The Chief Executive Officer and the Chairman have the highest levels of responsibility, and therefore, are eligible for the two highest bonus percentage ranges. The Vice President and General Manager—Surfactants andranges as compared to the Vice President and General Manager—Polymers, as leaders of the two largest business units, as well as the Vice President and Chief Financial Officer, responsible for all Company financial functions, are eligible for the next highest level of bonus percentage.other NEOs. Under the terms of the Stepan Company Management Incentive Plan (As Amended and Restated Effective January 1, 2010), (the “Management Incentive Plan”), the maximum percentage of an executive’s annual bonus is 150% of his or her annual base salary, up to a maximum dollar amount of $1,500,000. The following chart reflects the target bonus range, as a percentage of annual base salary, for each NEO for calendar year 2010:the 2012 annual bonus:

Within the target bonus ranges shown above, each NEO’s annual bonus is directly determined by the Company’s overall financial performance (“Corporate Financial Performance Objectives”) and, for NEOs other than the Chief Executive Officer and the Chairman, the achievement of a set of individual performance goals,objectives (“Individual Performance Objectives”), as described below. Payouts against each

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goal objective are based on the relative level of achievement of the goal,objective.

While the basic premise of the Company’s incentive plans, “pay for performance,” remains unchanged, in 2012, the Company transitioned to new terminology for its short-term incentive payout categories for all NEOs, other executive officers and other key employees. This change was done to more properly reflect general market practice for short-term incentive objectives as well as to more closely align the terminology of the short-term incentive plan with the Company’s long-term incentive plan. The Company and Committee believe that this coordinated alignment will provide the optimal incentive platform for the Company to continue to improve overall performance, both short-term and long-term, representing the interests of stockholders. The change in terminology does not increase the overall cost of the short-term incentive program and the overall basic design was revised as described below. These changes do not result in any increased payout opportunity or proration that did not already exist.

The specific change implemented for 2012 applied only to Corporate Financial Performance Objectives: Corporate Net Income, Corporate Return on Invested Capital (“ROIC”) and Free Cash Flow. For these three

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financial objectives, the Company discontinued using the categories of Marginal, Competent, Commendable and Distinguished. These categories were replaced by new categories of Threshold, Target and Maximum. These are the same categories already used for long-term incentive compensation grants of performance shares and are discussed below in the “Long-Term Incentive Compensation” section. The prior category of Marginal changed to Threshold, Distinguished changed to Target, and Stretch Target, as described below, changed to Maximum. The proration between levels of achievement was not changed and achieving Threshold or below will result in no bonus payout, the same result as the Marginal category. As with the Stretch Target, the Maximum is only applicable to the Corporate Net Income achievement, but the Committee reserves the right to exercise negative discretion should ROIC and Free Cash Flow performance fall significantly below Target. Additionally, the Committee reserves the right to include or exclude any acquisition or divestiture in exercising negative discretion. Acquisitions are not typically included in the year they occur unless they are part of the plan or budget for that year.

For 2012, all other objectives were measured against fourusing the following categories: Marginal, Competent, Commendable and Distinguished. The Marginal level represents the minimum threshold that must be exceeded in order to obtain any payout against that goal;objective; in contrast, the Distinguished level represents the targetTarget threshold that must be met to obtain the maximum percentage payout for that goal.objective. The Competent and Commendable levels, intended to be challenging but reasonably obtainable, are set at prorated amounts between the Marginal and Distinguished levels.

Few, if any, managers or executives achieve the Target or Distinguished level for all of their goalsobjectives in any calendar year. The Maximum level is designed to incent exceptional corporate performance, in excess of the Target, to achieve a payout at that level. Beginning in 2013, the Company is continuing to transition objective-setting terminology to Threshold and Target for various business units and other employee groups throughout the Company as appropriate.

The extent, if any, to which an incentive award will be payable to a Covered Employee (executive,(as defined below) will be based solely upon the degree of achievement of pre-established performance goals over the specified calendar year. (A Covered Employee is an executive, managerial andor key employeesemployee of the Company, including subsidiaries, designated by the Committee prior to the grant of an award within the meaning of Section 162(m)(3) of the Internal Revenue Code of 1986, as amended) will be based solely upon the degree of achievement of pre-established Performance Goals over the specified calendar year, provided however, that theamended.) The Committee may, in its sole discretion, reduce or eliminate the amount which would otherwise be payable with respect to a calendar year. In addition, bonus payments as a whole may be reduced, prorated, or eliminated entirely based on Company performance if corporate net incomeCorporate Net Income falls below certain pre-determined levels. Similarly, in years when Company performance is exceptional and above the DistinguishedTarget level, it is possible for NEOs to receive bonuses above target (see Stretch target description below),Target, while in years when Company performance is below the MarginalThreshold level, no bonus will be paid based upon Company performance.

Beginning in 2010, allAll executive officers and other key Company executives have an additional Stretch targetTarget added above the Distinguished level, which rewards exceptional Company performance. For 2010,Beginning in 2012, the Stretch targetTarget, as stated above, was renamed Maximum, which represents achievement above the Target level. As in the past, the Maximum objective was based on Corporate Net Income and was set by the Committee at $83.0$92.0 million. Any additional reward earned is prorated between the DistinguishedTarget and StretchMaximum levels for Corporate Net Income only. The upside potential for executive officers, including all NEOs, is an additional 50% of any individual’s earned bonus payout. Other key executives also have either a 50% or 25% upside potential on the same Company objectives. If the Stretch targetMaximum is achieved or exceeded, the Chief Executive Officer is eligible for a maximum bonus of 150% of base salary (100% Target multiplied by 150%), the Chairman is eligible for a maximum bonus of 112.5% of base salary (75% Target multiplied by 150%), and the other NEOs are each eligible for a maximum bonus of 90% of base salary. Stretch targets aresalary (60% Target multiplied by 150%).

The Maximum level objective for Corporate Net Income is set at the same time all Company target objectivesCorporate Financial Performance Objectives are approved and areis designed to be very difficult to achieve, i.e., only a 10%-15%

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probability of achievement. These typesThis type of Stretch targets areMaximum level objective is a common compensation practice, and the Company believes it is appropriate to use such Stretch targetsan objective to attract and retain key Company employees who have the greatest impact on the Company results each year. year and to incent exceptional corporate performance which benefits all stockholders.

For 2010,2012, the Company exceeded the Corporate Net Income objective with a result of $84.8 million versus the Target of $84.0 million, but did not achieve the Maximum of $92.0 million. However, by exceeding the Target, the participants realized an increased award prorated between the Target and Maximum objectives. The actual results of $0.8 million above the Target, or 10% of the amount between the Target of $84.0 million and the Maximum of $92.0 million, resulted in each NEO and other eligible executive officers and key executives receiving an additional Stretch target10% ($0.8 million excess above Target divided by $8.0 million difference between Target and therefore noMaximum) of their upside potential. This means that each participant with 50% upside had his or her total annual bonus amounts were paid.amount increased by 5.0%. All NEOs and Executive Officers received an additional 5.0% or 105% of the annual bonus amount they would have each received if the Target had not been exceeded. The Company believes that exceeding the Target is a significant achievement which benefits all stockholders, and the potential of upside payouts for executive officers and other key executives is appropriate and is aligned with the Company’s compensation philosophy of paying for performance.

The Committee establishes the Company’s overall financial performance targetsCorporate Financial Performance Objectives at the beginning of each calendar year. In 2010,2012, the Committee established targets for the three overall financial performance measuresCorporate Financial Performance Objectives for all NEOs: Corporate Net Income, Corporate Return on Invested Capital (ROIC)ROIC and Corporate Free Cash Flow.

In 2010,2012, the following levels were set for each of these targets:objectives:

Each NEO’s annual bonus objectives include these Corporate financial performance targets.Financial Performance Objectives. Given their respective levels of responsibility, the Chairman and the Chief Executive Officer both had their bonus based entirely on these Corporate financial performance targets,Financial Performance Objectives, although each bonus amount was subject to a reduction

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if the Corporate Safety TargetsObjectives were not achieved. The Vice President and Chief Financial Officer had 67%50% of his bonus tied to the same Corporate financial performance targets.Financial Performance Objectives. The other NEOs each had at least 40% of their bonus tied to these same targets.objectives.

The following table shows the Company’s performance against the Corporate Net Income, ROIC and Free Cash Flow Targetsobjectives in 2010:2012:

For 2010,2012, the Company exceeded Target for Corporate Net Income, and ROIC performance targets were achieved between the Commendable and Distinguished levels, and the Free Cash Flow performance target was below the Marginal level and therefore not achieved. By mutual agreement between theFlow. The Chief Executive Officer recommended, and the Committee approved the recommendation prior to the start of 2012,

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that the year, the 20102012 bonuses would be reduced by up to 3.0% (1.5% related to Global Recordable Rate and 1.5% related to Global Total Incident Rate) for the Chairman and the Chief Executive Officer if the Company did not achieve its Corporate Safety Targets.Objectives. Although the Company significantly reducedmade additional improvements in reducing the OSHAGlobal Recordable Incident Rate from 1.340.89 in 20092011 to 1.050.82 in 2010,2012, the Company did not achieve this goal. In addition,its aggressive 2012 objective. Consistent with the Distinguished levelCompany’s priority to continue to increase the safety of its operations, the 2012 Global Recordable Rate objective was set at 0.50. The Company did achieve 82.67% of Target for the Global Total Incident Rate, which was notalso made much more rigorous for 2012. The 2012 Global Total Incident Rate objective was set at 5.00 versus the 7.34 actual result in 2011. The 5.39 rate achieved soexhibited significant improvement, particularly with a greater than 20% reduction in spills. To reflect the Company’s performance level on these more rigorous Corporate Safety Objectives, an additional reduction was made to the 20102012 bonuses for the Chairman and the Chief Executive Officer. As a result, the 20102012 bonuses for the Chairman and the Chief Executive Officer were each reduced by 1.83%1.76% (1.5% reduction for not achieving the Global Recordable Rate objective plus an additional reduction of 0.26% due to partial achievement of the Global Total Incident Rate objective).

The 20112013 bonus for both the Chairman and the Chief Executive Officer will be based on achievement of Corporate Net Income, ROIC and Free Cash Flow financial performance targets.objectives. The allocation assigned to each of these performance objectives for NEOs, other executive officers and other key employees will be Corporate Net Income at 50%, ROIC at 40% and Free Cash Flow at 10% to properly reflect the relative significance of each objective to overall Company performance and to appropriately reflect the Company’s growth strategy which places greater emphasis on Corporate Net Income. The Chairman and the Chief Executive Officer will continue to have a portion of their respective bonus reduced if the Corporate Safety TargetsObjectives are not achieved. At least 40% of the 20112013 bonus for all other executive officers will be based on achievement of these same three financial performance targets. The remainder of the 2011 bonus for all other executive officers will be determined based on financial and performance targets appropriate for their respective areas of responsibility.objectives.

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For executives other than the Chief Executive Officer and the Chairman, the Chief Executive Officer and the executive agree upon individual performance targetsIndividual Performance Objectives at the beginning of each calendar year. These individual performance targetsIndividual Performance Objectives may either be financial targetsobjectives for a particular business segment or organization, or achievement of certain financial, safety, service or other goalsobjectives specific to their function and responsibility. For 2010,2012, the individual performance targetsIndividual Performance Objectives and the results for the other NEOs arewere as stated below:follows:

James E. Hurlbutt

Vice President and Chief Financial Officer

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John V. Venegoni

Vice President and General Manager—Surfactants

Robert J. Wood

Vice President and General Manager—Polymers

Scott C. Mason

Vice President—Supply Chain

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Long-Term Incentive Compensation

Pursuant to the Stepan Company 20062011 Incentive Compensation Plan which was previously approved by stockholders at the 20062011 Annual Meeting of Stockholders (the “2006“2011 Incentive Plan”), executive officers are eligible to receive grants of stock option grantsoptions, stock appreciation rights (“SARs”) and performance shares of stock on an annual basis in order to (i) promote retention of executives, (ii) recognize outstanding job performance, and (iii) encourage a focus on the Company’s long-term financial results, which in turnare intended to enhance the likelihood of increases in the value of the Company’s Common Stock. The Committee is responsible for approving all grants of stock option grantsoptions, SARs and stock awards. Eligibility for long-term incentives is based on two factors: (1) job performance, and (2) the potential of each executive or executive officer to impact the Company’s financial results.

SARs, as described below, were introduced as part of the stock grant program for 2012 grants. After reviewing stock dilution benchmarking data with Towers Watson, the Company determined that to reduce the dilutive effect of stock grants to participants, it would be appropriate and beneficial to include SARs as part of the annual stock grants. SARs, as with the other forms of stock awards that the Company grants as long-term incentive compensation, are performance-based, but the exercises of SARs may only be settled in cash. The Committee believes that reducing stock dilution by granting SARs increases individual stockholder’s value in Company stock.

The Company has typically granted stock options and performance shares to NEOs, other executive officers and any other Company executives participating in the long-term incentive plan. In 2012, the Committee reviewed and approved an allocation of long-term incentives granted to each executive is primarily based on survey data supplied by Towers Watson. Currently, long-term incentives are weighted at approximately 40%20% of the total grant amount as stock options, 20% of the total grant amount as SARs, and 60% of the total grant amount as performance shares. These ratios have been benchmarked as comparableThe purpose of making this allocation change was to market practice.reduce the overall dilutive effect of the stock option grants. The exercise of stock option grants increases the number of outstanding shares, thereby diluting the Company’s existing stockholders’ share value. Granting SARs and reallocating awards equally between stock options and SARs does not increase the amount of value provided to participants in the 2011 Incentive Plan. No change was made related to grants of performance shares. The long-term incentive components for the Chief Executive Officer are weightedwere allocated at approximately 60%30% of the total grant amount as stock options, 30% of the total grant amount as SARs, and 40% of the total grant amount as performance shares. The Committee approved this ratioallocation for the Chief Executive Officer due to the fact that the Chief Executive Officer has the highest level of responsibility for the Company’s direction and performance, and also because such ratioallocation is more closely aligned with stockholder value.

The value of long-term incentives granted to each executive is primarily based on survey data provided by Towers Watson. In 2013, the Committee reviewed and approved a different allocation of long-term incentives at approximately 15% of the total grant amount as stock options, 35% of the total grant amount as SARs, and 50% of the total grant amount as performance shares. The purpose of this allocation change was to further mitigate the dilutive effect of these grants to existing stockholders. There were no allocation changes made in 2013 for the long-term incentive components for the Chief Executive Officer.

An annual grant of stock options, SARs and performance shares is made each year onat the day of the CommitteeCommittee’s February meeting, held in February, at which time the Committee determines which performance levels for the previous year were met. In addition, grants of stock option grantsoptions, SARs and performance shares may be awarded to executive officers at other times based on factors that the Committee determines to be relevant, including upon hire, upon promotion or for extraordinary job performance.

Stock option grantsoptions are madegranted annually at the fair market value of the Common Stock on the date of grant with a two-year vesting period and an eight-yeara ten-year term. The option price is set at the date of grant. Backdating of stock options is prohibited under anyall circumstances. The Company does not have any program or current practice, nor

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does it plan to have any future program or practice, to time option or other share grants with the release of material non-public information. The Company has not timed, nor does it plan to time, the release of material non-public information for the purpose of increasing the value of executive compensation.

SARs are granted annually at the fair market value of the Common Stock on the date of the grant with a two-year vesting period and a ten-year term. The price is set at the date of grant. SARs are only settled in cash.

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Participants are granted a target number of performance shares that can be earned based on the achievement of Corporate Net Income and ROIC targets in the third year of a three-year period. The number of shares actually earned varies depending on the level of performance achieved. The Company uses athe following matrix to determine the award. The matrix is included below:award:

The Threshold level for both Corporate Net Income and ROIC must be met before any payout occurs. Proration will occur between boxes and Threshold, Target and Maximum levels achieved, as necessary, depending on actual results.

Under the matrix, participants receive a stock distribution of 100% of the performance shares granted if the Target level is met, 50% if the Threshold level is met, and up to 200% if the Maximum level is met. Other intermediate levels are also provided for and shown in each box in the matrix. In addition, amounts may be prorated between matrix boxes depending on actual results. The Committee intends for Threshold objectives shouldto have an 80% probability of achievement, Target objectives shouldto have a 50% to 60% probability of achievement, and the Maximum objectives shouldto have a 10% to 15% probability of achievement. If the minimum Threshold objectives are not met, no performance shares will be distributed to participants.

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Performance shares granted in 20082010 were earned based upon 20102012 Company performance for Corporate Net Income and ROIC. CompanyThe results in bothfor Corporate Net Income were between the Threshold and Target levels and ROIC exceeded the maximum soTarget level. Therefore, participants received 200%84% of the number of shares granted. The 20102012 Target objectives are shown in the table below:

During 2010,2012, the Committee approved the grants of stock options, SARs and stockperformance share awards for NEOs shown in the Grants of Plan-Based Awards Table included in this proxy statement pursuant to the 20062011 Incentive Plan. Grants of stock awards for NEOs, other executive officers and key employees may differ based upon the participant’s role at the Company. The Company previously implemented the Stepan Company Performance Award Deferred Compensation Plan (Effective January 1, 2008) which provides participants with the opportunity to defer receipt of all or a portion of certain incentive compensation.

Additionally, the Board of Directors is recommending that the stockholders approve the Stepan Company 2011 Incentive Compensation Plan (the “2011 Incentive Plan”). The 2011 Incentive Plan would be effective when approved by the stockholders at the 2011 Annual Meeting of Stockholders. A copy of the 2011 Incentive Plan is included as Appendix A and a summary is included in this proxy statement in the section “Approval of Stepan Company 2011 Incentive Compensation Plan.” The Board of Directors believes that the 2011 Incentive Plan will2012 grants allow the Company to provide a long-term incentive plan whichcompensation that is market competitive to attract and retain executiveexecutives and other key high performing employees who will drive long-term growth of the Company, as well as provide further alignment of the interests of those participants with the Company’s stockholders.

Retirement Plans

Effective June 30, 2006, the Company froze the Retirement Plan for Salaried Employees (the “Defined Benefit Plan” or the “Retirement Plan for Salaried Employees”) and ended the benefit accrual for all participants. Eligible participants were all employees not covered by a collective bargaining agreement who were employees prior to July 1, 2006. The Defined Benefit Plan was replaced by the Savings and Investment Retirement Savings Plan, which provides for Company contributions into the employee’s savings and investment retirement savings plan account (see discussion below in

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“ the “Savings and Investment Retirement Savings Plan” section). The primary purpose of both the Defined Benefit Plan and the Savings and Investment Retirement Savings Plan is to retain valuable employees.

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The pension benefits included in the Pension Benefits Table are the present value of the benefits expected to be paid under the Defined Benefit Plan in the future. The amount of each future payment is based on the current accrued pension benefit. The actuarial assumptions, with the exception of the expected retirement age, are consistent with those used in the Company’s financial statements. The retirement age is the earliest unreduced retirement age as defined in the Defined Benefit Plan and the Savings and Investment Retirement Savings Plan.

The pension benefit information set forth in this proxy statement has been calculated based on actuarial assumptions that are considered to be reasonable. Other actuarial assumptions could also be considered to be reasonable which would result in different pension benefit estimates. The amounts shown are based on the provisions applicable in each pension benefit plan in which the NEOs participate.

Additional information regarding these benefits and other elements of the pension benefits are discussed below in the “Retirement Savings“Savings and Investment Retirement Plan” section.

InPursuant to the Savings and Investment Retirement Plan (“SIRP”), in each payroll period, the Company makes a contribution to the savings and investment retirement savings plan account of each eligible employee, including the executive officers and the NEOs. The amount of the Company contribution is currently four percent of the participant’s base salary for the portion of the payroll period during which the participant was an eligible employee. This percentage is the same for all employees, including the executive officers and the NEOs.

In addition, for certain employees, based on a non-discriminatory formula developed with and calculated by an outside actuarial firm, Towers Watson, the Company made an additional contribution in the form of a defined benefit replacement allocation contribution (“DBRA Contribution”), which was designed to bridge the transition from the Defined Benefit Plan to the Retirement Savings Plan. The DBRA Contribution for eligible participants began for the calendar quarter ended September 30, 2006, and continued on a quarterly basis until December 31, 2010. In the event an eligible participant left the Company before receiving the full amount of his or her DBRA Contribution, the eligible participant forfeited the right to any unpaid contribution. Other provisions were as set forth in the Retirement Savings Plan. During 2010, all All of the NEOs received a contribution of four percent of their base salary into their Retirement Savings Plan account. All of the NEOs, except the Chairman, received DBRA ContributionsSIRP contributions in 20102012 in the amounts set forth in the Summary Compensation Table.

In addition, the Company may make two types of contributions (Basic Company Contribution and Supplemental Company Contribution) under the Profit Sharing Plan which is a component of the SIRP. The Company’s Profit Sharing Plan is designed to (i) provide eligible employees with an element of their retirement savings that is directly connected to the Company’s financial results, (ii) provide a tax deferred retirement savings vehicle while giving all participants the incentive to optimize the Company’s financial results, and (iii) allow employees to enjoy the benefits of the Company’s success.

For the Basic Company Contribution, each year the Company determines, based on the Company’s financial results, if it will recommend to the Committee that the Company make a Basic Company Contribution to the accounts of eligible participants in the Profit Sharing Plan. The Committee reviews the Company’s recommendation and, if approved, presents the recommendation to the Board of Directors for approval. The Committee typically recommends a Basic Company Contribution that is based on four and one-half percent of pre-tax income. In addition to the Basic Company Contribution, the Company’s Board of Directors may make a Supplemental Company Contribution to the Profit Sharing Plan in an additional amount at its discretion.

NEOs participate in the same basic retirement plans as all other employees, with the exception of fourthree of the NEOs (Messrs. Stepan, Stepan, Jr., Venegoni and Wood)Venegoni) who are also currently eligible for benefits under the Supplemental Executive Retirement Plan (“SERP”). The U.S. Internal Revenue Service (“IRS”) limits benefits that otherwise would be available through the Retirement Plan for Salaried Employees. The SERP was created to provide supplemental retirement benefits to any executive affected by these IRS limits. The benefits are calculated according to the same retirement plan formula that applies to all eligible employees. The SERP is commonly offered to attract, retain and motivate the NEOs and is necessary to be competitive in the marketplace. There are no early retirement arrangements specific to the NEOs and the Company believes that all elements of the SERP are customary for this type of retirement plan. The Retirement Plan for Salaried Employees SERP was frozen as of June 30, 2006. The funding status of this SERP is reviewed periodically. Currently, the Company has elected not to fund this SERP.

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Profit Sharing Plans

The Profit Sharing Plan is designed to (i) provide eligible employees with an element of their retirement savings that is directly connected to the Company’s financial results, (ii) provide a tax deferred retirement savings vehicle while giving all participants the incentive to optimize the Company’s financial results, and (iii) allow employees to enjoy the benefits of the Company’s success.

The Company may make two types of contributions, basic and supplemental, under the Profit Sharing Plan, as described below:

Employee Stock Ownership PlansPlan

The first Stepan Company Employee Stock Ownership Plan II (“ESOP”ESOP II”) was originally established in 1985. ESOP wasis designed to:to (i) expand stock ownership among employees, (ii) encourage greater employee interest in the Company’s financial results, (iii) benefit employees financially by enabling them to acquire shares of the Company’s Common Stock without making contributions, and (iv) provide eligible employees with the opportunity to share in the growth of the Company. ESOP was frozen and closed to new participants as of January 1, 1996.

Effective January 1, 2006, the Company established the new Stepan Company Employee Stock Ownership Plan II (“ESOP II”) to achieve the goals of ESOP as listed above. ESOP II is a separate and distinct plan from ESOP. Only employees who are employed by the Company on or after January 1, 2006, and who are participants in the Profit Sharing Plan, are eligible to receive contributions into ESOP II. Contributions to ESOP II are a percentage of the Company’s Profit Sharing Plan contribution, (percentageas determined by the Committee),Committee, which are then reallocated to ESOP II in shares of StepanCompany stock. For example, the Committee may approve a Profit Sharing Plan contribution based upon the contribution formula noted in the “Profit Sharing“Savings and Investment Retirement Plan” section above, and then

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determine that 50% of the total contribution will remain in the Profit Sharing Plan and 50% will be reallocated to ESOP II. The ESOP II allocation is made to broaden StepanCompany stock ownership among employees for further alignment with the interests of Company stockholders.

Perquisites

The Company provides NEOs with limited perquisites that the Company and the Committee believe are reasonable and consistent with the Company’s overall compensation program since they better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to the NEOs and other executives. For 2010,2012, these perquisites represented a small percentage of the NEOs’each NEO’s base compensation, ranging from 2.3%2.12% to 6.9%5.89%, with a median of 2.6%2.47%. The dollar values attributable to each NEO were also minimal, ranging from $6,654$6,645 to $34,640,$29,448, with a median of $8,462.$9,936.

All executives at the Vice President level and higher, including the NEOs, are provided the use of Company-leased vehicles, including fuel, maintenance and insurance. The allowance for the initial vehicle cost is set by salary grade. The compensation attributable to the personal use of a Company-leased vehicle is included in the Summary Compensation Table under All Other Compensation. The personal use value is computed using the annual lease valuation rule. Under this method, the purchase price of the car is used to compute an annual lease value based on IRS tables.

The Company maintains two Company-owned properties and a Company-owned vehicle which are not used solely for business purposes. Executives, including the NEOs, are allowed to use these properties or vehicle for personal use if and when they are not needed for business purposes. The value of the use of these properties is based on the incremental cost to the Company, and the value of the vehicle is based on mileage use calculated at IRS standard mileage rates. When these properties or vehicle are used by the NEOs for personal reasons, such values are included in the Summary Compensation Table under All Other Compensation.

The Company purchases tickets for a variety of entertainment events. These tickets are used primarily for business purposes. However, at various times, these tickets are used by executives for personal use. The value of any tickets used by an NEO for personal use is included in the Summary Compensation Table under All Other Compensation. In addition, the Company pays membership dues for both the Chief Executive Officer and the Chairman are members offor country clubsclub memberships which are not exclusively used for business entertainment. As such, theThe actual cost paid for club membership dues is included in the Summary Compensation Table under All Other Compensation.

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No Severance/Change-in-Control Provisions

None of the NEOs or other executive officers has any arrangements that provide for severance payments. Additionally, none of the NEOs or other executive officers is entitled to payment of any benefits upon a change-in-control.

Stock Ownership Policy and Stock Retention Guidelines

The Company maintains a stock ownership policy with stock ownership guidelines for key executives. The Company instituted a stock ownership policy because it believes that ownership of Company stock by key executives is desirable in order to focus both short-term and long-term decision-making on the best interests of the Company and its stockholders. Key executives’ ownership of Company stock aligns those executives’ interests with the Company’s financial performance, including the performance of the Company’s Common Stock.

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The stock ownership guidelines apply to all NEOs and other key Company executives who participate in the Management Incentive Plan. The Chairman and the Chief Executive Officer must each maintain ongoing ownership of Common Stock in an amount equivalent in value to at least five times their respective annual base salary. Other executive officers must own a minimum of two times their annual base salary. Stock ownership requirements for the Chairman and the Chief Executive Officer are higher based on their higher levels of responsibility.

All such executives, including the NEOs, have five years from their initial stock option grant, to achieve compliance with these stock ownership requirements. ExecutivesAll executives, including the NEOs, must meet their respective stock ownership requirement by making approximately 20 percent progress each year for five years. An NEO who is nearingRecognizing the Company’s normalimportance of retirement age of 65planning, NEOs may, commencing at age 61, reduce his or hertheir holdings by 20 percent to a minimum of one times his or her annual base salary by the calendar year he or she attains the age of 65.

The following shares count towards the stock ownership requirements: (i) shares owned directly or by any immediate family member, (ii) shares owned indirectly as trustee or custodian for the benefit of children, (iii) shares owned in any Company Employee Stock Ownership Plan,the Company’s ESOP II, (iv) shares owned in the Company Employee Stock Purchase Plan, and (v) shares held in any Company deferred compensation plan. Stock option grantsGrants of stock options,SARs and performance shares do not count towards the stock ownership requirement unless actually exercised or earned, respectively.earned. No other shares other than those stated above count towards the stock ownership requirements.

The stock ownership policy is reviewed by the Committee, as needed, on a periodic basis. The Company periodically surveysreviews this policy against general industry benchmarks of stock ownership.

The Committee reviews annually whether executives, including the NEOs, are in compliance with the stock ownership policy. The Committee determined that all nine executive officers, including the NEOs, were in compliance with the Company’s stock ownership requirements as of February 2011.2013. If an executive fails to comply with stock ownership policy and annual progress requirements, the executive is not eligible to receive grants of stock option grants,options, SARs and performance shares, or any other awards under the 20062011 Incentive Plan, until compliance with these requirements is achieved.

The Company does not have a stock retention policy. The Company believes that its stock ownership policy is sufficient to meet the Company’s needs in ensuring that key executives’ decisions will be based on both short-term and long-term results of the Company which will benefit both the Company and its stockholders.

Post-Termination Benefits

As a general rule, the Company provides no post-termination compensation to executives other than relatively nominal retirement gifts upon their retirement from the Company. There are no written or verbal change-in-control or severance agreements with any executives at the Company. In addition, there are no special

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considerations for Company executives in connection with terminations due to death, disability, for cause or voluntary choice, including retirement. The amount of any NEO post-termination compensation received, if any, is included in the Summary Compensation Table. In 2010,2012, no NEOs retired and no post-termination compensation was paid to any NEO.

Impact of Tax and Accounting Requirements on Compensation

The Company regularly monitors compensation and benefits-related accounting rules, securities rules, tax rules and all other federal and state regulations on an ongoing basis through internal sources and external sources such as consultants, advisors and outside legal counsel. The Company routinely considers such rules and regulations and their impact on plan design alternatives and Company performance.

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Deductibility of Executive Compensation

In developing and implementing executive compensation policies and programs, the Committee considers whether particular payments and awards are deductible for federal income tax purposes. Federal income tax law limits deductible compensation at $1 million per year for each of the NEOs, subject to certain exceptions. The Company’s general objective is to meet the requirements of Code Section 162(m) in order to have the ability to deduct certain additional performance based compensation. The Company’s compensation plans are generally designed to achieve this objective. However, this objective is also balanced with the goal of providing competitive incentives to attract, appropriately reward, and retain performing executives and other employees. While it is the general intention of the Committee to meet the requirements for deductibility of performance based compensation under Code Section 162(m), the Committee may approve payment of non-deductible compensation from time to time if circumstances warrant such action. The Committee will reviewreviews and monitormonitors its policy with respect to the deductibility of compensation, as necessary.

Nonqualified Deferred Compensation

The American Jobs Creation Act of 2004 changed the tax rules applicable to nonqualified deferred compensation arrangements. Several of the Company’s plans have provisions whichthat require compliance with Code Section 409A and related regulations. All of the Company’s applicable plans comply with Code Section 409A.

Summary of Executive Compensation in 2010

In 2010, the Company and the Committee applied the compensation policies and principles described in this Compensation Discussion and Analysis in determining NEO compensation. Specifically:

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COMPENSATION AND DEVELOPMENT COMMITTEE REPORT

In 2010,2012, the Company’s Compensation and Development Committee was comprised of the following Non-Employee Directors: Messrs. Boyce, Dearth (elected April 20, 2010)24, 2012), Grojean, Hendrickson,Delgado, Lawton Potter (retired April 20, 2010) and Wehmer. Each of these Directors satisfies the New York Stock Exchange’s rules for independence. During 2010,2012, Mr. Lawton served as Chairman of the Committee.

The Compensation and Development Committee has reviewed and discussed the Compensation Discussion and Analysis with the management of the Company. Based on this review and discussion, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the proxy statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.2012.

Michael R. Boyce

Thomas F. GrojeanRandall S. Dearth

Gary E. HendricksonJoaquin Delgado

Gregory E. Lawton

Edward J. Wehmer

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SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by each of the NEOs for the fiscal years ended on December 31, 2008,2010, December 31, 20092011 and December 31, 2010.2012.

In 2010,2012, the base salary for the Chief Executive Officer, Mr. Stepan, Jr., was increased by 16.7% (6.0% for merit and 10.7% for benchmarked market adjustment),2.78% which is consistent with Company guidelines. The base salaries for the other executive officers of the Company are reviewed annually and adjusted as appropriate by the Compensation and Development Committee as discussed above in the Compensation Discussion and Analysis. In 2010,2012, the merit increases for the other executive officers were consistent with Company guidelines. Specifically, for the NEOs, the Committee approved the following increases in annual base salary in 2010:2012: Mr. Hurlbutt: 7.3% (5.0%7.08% (2.80% for merit and 2.3%4.28% for benchmarked market adjustment); Mr. Stepan: 0%; Mr. Venegoni: 5.6%4.92%; and Mr. Wood: 5.4%Mason: 3.79%. The 20102012 base salary increases were effective March 1, 2010.

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The amounts included for 20102012 Stock Awards reflect the aggregate grant date fair value for Stock Awards granted during the fiscal year ended December 31, 2010,2012, under the 20062011 Incentive Plan calculated in accordance

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with FASB ASC Topic 718. In addition, amounts included for 20102012 Option Awards reflect the aggregate grant date fair value for Option Awards granted during the fiscal year ended December 31, 2010,2012, under the 20062011 Incentive Plan calculated in accordance with FASB ASC Topic 718.

In 2011,2013, the base salary for the Chief Executive Officer, Mr. Stepan, Jr., was increased by 2.86%5.41% which is consistent with Company guidelines. The 20112013 merit increases for the other executive officers are also consistent with Company guidelines. Specifically, for the NEOs, the Committee approved the following increases in annual base salary in 2011:2013: Mr. Hurlbutt: 2.88%3.08%; Mr. Stepan: 0%; Mr. Venegoni: 2.93%3.70%; and Mr. Wood: 2.88%Mason: 3.17%. The 20112013 base salary increases were effective March 1, 2011.2013.

The Chairman, Mr. Stepan, has received no base salary increase and no stock options or stock awards since Mr. Stepan, Jr.’s election as the Company’s Chief Executive Officer effective January 1, 2006.

The Company has not entered into any employment agreements with any of the NEOs. Additional information related to each component of compensation for the NEOs is provided above in the Compensation Discussion and Analysis.

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GRANTS OF PLAN-BASED AWARDS